Английский язык. Практический курс для решения бизнес-задач Пусенкова Нина
buy back v – выкупать
14. Treasury Department (US) – Казначейство США
15. bill n – переводной вексель (тратта), казначейский вексель; банкнота; счет; документ о передаче прав собственности на товар; свидетельство долга заемщика кредитору; билль (закон)
16. note n – краткосрочная ценная бумага; долговое обязательство; банкнота; письменное обязательство выплатить определенную сумму на оговоренных условиях
17. Treasury Inflation-Protected Security (TIPS) – казначейская облигация, защищенная от инфляции
18. accrual n – начисление
accrue v – начислять
19. hedge n – хедж, хеджирование
hedge v – хеджировать
20. Consumer Price Index (CPI) – индекс потребительских цен
21. Separate Trading of Registered Interest and Principal of Securities (STRIPS) – раздельная торговля основной суммой и купонами казначейских облигаций
22. Government-Sponsored Enterprise (GSE) – предприятия, созданные при поддержке правительства
23. Agencies n – ценные бумаги федеральных агентств США
24. Fannie Mae (Federal National Mortgage Association) – Федеральная национальная ипотечная ассоциация
25. Freddie Mac (Federal Home Loan Mortgage Corporation) – Федеральная корпорация жилищного ипотечного кредита
26. mortgage-backed securities (mortgages) – ценные бумаги, обеспеченные ипотекой
27. pass-through securities – «пропускающие» ценные бумаги
28. Сollateralized Mortgage Obligation (CMO) – обеспеченная ипотечная облигация
29. corporate bond (corporate) – корпоративная облигация
30. high-grade bond – облигация с высоким рейтингом
31. high-yield bond – высокодоходная облигация
32. risk-tolerant investor – инвестор, приемлющий риск
33. municipal bond – муниципальная облигация
34. General Obligation (GO) bond – облигация общих обязательств
35. revenue bond – доходная облигация
36. tax bracket – налоговый разряд
37. taxable а – налогооблагаемый
38. certificate of deposit (CD) – депозитный сертификат
39. Federal Deposit Insurance Corporation (FDIC) – Федеральная корпорация страхования депозитов (США)
40. jumbo CD – крупный депозитный сертификат
41. laddered portfolio – портфель-лестница
42. yield curve – кривая доходности
Exercise 1. Answer the following questions.
1. Why do investors like bonds? 2. What are callable and bullet structures? 3. What are the key benefits of government securities? 4. What are the most popular types of Treasuries? 5. Why are Agencies considered second in quality only to the US government securities? 6. What is the mechanism of mortgages? 7. Why do companies issue corporates? 8. What is credit quality? 9. What are the main types of municipals? 10. Why isn’t credit risk a concern with CDs? 11. How can you construct an optimum investment portfolio? 12. What are the best strategies for bond investors?
Exercise 2*. Find terms in the text that match definitions given below and make sentences of your own with each term.
1. the issuer can redeem the bond before maturity due to specific conditions
2. certificate that indicates a specific deposit has been given to the bank; the bank pays interest on the funds until the maturity date
3. the likelihood of default rated from AAA and below
4. credit quality of AA or AAA
5. an obligation with a maturity of more than one year from when it was issued
6. the date that a contract expires
7. a bond offered by state and local government
8. a company’s purchase of its outstanding stock
9. a negotiable debt obligation issued by the U.S. Treasury with maturities of 13, 26, and 52 weeks; non interest bearing but issued on a discount basis instead
10. coupon securities issued by the U.S. Treasury with semi-annual interest and maturities of 10 to 30 years
11. securities issued by the U.S. Treasury bearing interest and with maturities of 2 to 10 years
12. annual percentage rate of return, determined by dividing income by principal; or the effective rate of interest paid on a note or bond
13. the normal tendency of yields to rise with the increasing maturity of the security
Exercise 3. Read the following text describing different types of investors. Identify which type is closest to your personality and devise an investment strategy for yourself, and for the following individuals: 1. A semi-retired professor; 2. A 40-something engineer with two teenage children; 3. A housewife in her early thirties married to a rich businessman; 4. A computer genius in his mid twenties.
The Successful Investment Journey
Know Yourself
Nobody knows you and your situation better than you do. Therefore, you may be the most qualified person to do your own investing – all you need is a bit of help. Identify the personality traits that can assist you or prevent you from investing successfully and manage them accordingly.
A very useful behavioral model that helps investors to understand themselves was developed by Bailard, Biehl & Kaiser.
The model classifies investors according to two personality characteristics: method of action (careful or impetuous) and level of confidence (confident or anxious). Based on these personality traits, the BB&K model divides investors into five groups:
Individualist – careful and confident, often takes a «do-it-yourself» approach
Adventurer – volatile, entrepreneurial and strong willed
Celebrity – follower of the latest investment fads
Guardian – highly risk averse, wealth preserver
Straight Arrow – shares the characteristics of all of the above equally
Not surprisingly, the best investment results tend to be realized by an individualist, or someone who exhibits analytical behavior and confidence and has a good eye for value. However, if you determine that your personality traits resemble those of an adventurer, you can still achieve investment success if you adjust your strategy accordingly. In other words, regardless of which group you fit into, you should manage your core assets in a systematic and disciplined way.
Source: Investopedia, March 10, 2006, by Derek Polcyn, CFA
Exercise 4*. Find antonyms for the following terms and make sentences of your own with each pair.
Example: upstream – downstream
upside —…….
budget deficit —……….
developed markets —…….
loss-making —………..
in the red —……….
upgrade —……..
public sector —……..
individual investors —………
primary market —………
outperform —……..
Exercise 5*. Fill in the blanks using terms given below.
Why Stock Investors Should Purchase Bonds
No doubt……. outperformed……. for two years in a row. While past…….. cannot guarantee future results, recent market…… provides compelling enough evidence for most investors to consider an overall……. that solidly integrates these two important…….. classes.
Stocks still present…….. with the potential for excellent long-term……. But simply owning stocks – and leaving excess cash in a……. fund – may not be the optimal way to safeguard your…….. assets. In fact, SalomonSmithBarney currently recommends investors to include bonds, stocks and……. in their overall portfolio. Of course, only your specific goals and risk……… can dictate what…….. is right for you, but bear in mind that a balanced portfolio of both bonds and stocks would have outperformed an…….. portfolio over the past two years, and helped to dampen some of the volatility that characterized the……..
Undoubtedly, the primary reason you have purchased stocks has been to achieve……… in your investment portfolio. But did you know that bonds can help you achieve a number of complementary……..? The three most important are: (1) to preserve…….; (2) to supplement current…….; and (3) to enhance total…….. As the old…….. adage proclaims: Make your money in stocks, but keep your money in bonds.
The first two objectives are particularly relevant for investors whose portfolios are heavily…… in equity securities. Regarding capital preservation, the recent equity market volatility has confirmed once again that stocks are long-term investments and are not necessarily the most appropriate way to meet either short-term or more…… financial needs that are more predictably provided by…….. securities.
More evident, perhaps, is the stock investor’s diminished ability to generate income from equity…….. Until recently, stocks issued by many companies paid relatively high…….. Many investors even depend on stock dividends to……. their current income.
However, due to widespread government……… and growing investor demands for stock price………., high dividend-paying equities have become scarce as many companies have been forced to become more……… This has diverted…….instead to other corporate activities such as the purchase of new equipment, acquisitions or stock……..
Replace Disappearing Dividends
First the bad news: vanishing stock dividends are unlikely to reverse……. anytime into the……. future. The……. is further entrenched by large financial…….. now given to senior corporate managers and board members, commonly tied to stock price performance.
The good news, however, is that by complementing your equity holdings with a……… bond portfolio, you can establish a more predictable income……. Best of all, fixed-income securities afford you an enormous amount of……… to receive………. payments on a monthly, quarterly or semi-annual basis.
Source: www.citibank.com
Terms:
Wall Street, trend, equity-only, interest, course, cash, income, weighted, asset, allocation, deregulation, bonds, conservative, supplement, holdings, dividends, stocks, return, appreciation, stream, foreseeable, performance, fixed-income, volatility, diversified, portfolio strategy, individual investors, money market, financial, parameters, equity market, growth, objectives, capital, buybacks, incentives, flexibility, competitive, rewards, funds
Exercise 6. Translate into English.
Крупнейшие сделки 2003 года
2003 г. стал для российских финансовых рынков годом новых рекордов. В этом году состоялась крупнейшая международная сделка слияния/поглощения и крупнейшая эмиссия корпоративных облигаций. Агентство Moody’s впервые присвоило России инвестиционный рейтинг. Не обошлось и без разочарований, поскольку не состоялись по крайней мере две широко обсуждавшиеся сделки. В наступившем году возможен бурный рост в относительно слаборазвитых секторах, к которым относятся выпуск внутренних облигаций и размещение акций российских компаний на открытом рынке.
Рынок акций и облигаций
В 2003 г. было отмечено существенное увеличение выпуска корпоративных облигаций. Общая сумма заемных средств, привлеченных российскими компаниями через выпуск еврооблигаций, составила в 2003 г. $ 7,6 млрд по сравнению с $ 4 млрд в 2002 г. Выпуск внутренних рублевых облигаций также увеличился до $ 2,7 млрд по сравнению с $ 1,8 млрд в 2002 г.
В 2003 г. 13 российских компаний провели размещение 17 выпусков облигаций на международных рынках. В качестве главного заемщика выступил «Газпром», привлекший в феврале $ 1,75 млрд (крупнейший в истории России выпуск корпоративных облигаций), а осенью – 1 млрд евро. Помимо этого, Газпромбанк, дочернее предприятие «Газпрома», привлек в прошлом году $ 750 млн. Еще одним активным заемщиком стала компания МТС, разместившая три выпуска облигаций на общую сумму $ 1,1 млрд.
В прошедшем году было отмечено усиление активности российских банков, которые привлекли на международных рынках облигаций $ 2,25 млрд. Кроме Газпромбанка облигации размещали Сбербанк России, Внешторгбанк, банк «Зенит» и МДМ-Банк. Благодаря увеличению объема выпуска еврооблигаций банками наблюдается приток денежных средств в российский финансовый сектор и рост ресурсов для внутреннего кредитования.
В начале октября агентство Moody’s подняло суверенный рейтинг России до инвестиционного уровня. Это означает увеличение финансирования российских компаний и государственных организаций за счет выпуска еврооблигаций. Тем не менее остальные рейтинговые агентства сохраняют рейтинг России на уровне ниже инвестиционного (в частности, рейтинг Standard & Poor’s находится на уровне BB+).
В прошедшем году выпуск рублевых облигаций по-прежнему оставался существенным источником финансирования средних по размеру российских компаний, работающих в области металлургии, телекоммуникаций, ТНП и в других секторах. Этап стремительного увеличения выпусков еврооблигаций российскими компаниями в основном завершен, и в текущем году можно рассчитывать лишь на медленный рост, в то время как на рынке рублевых облигаций сохраняются возможности для более высоких темпов роста. По нашим данным, в прошлом году ряд крупных выпусков был отложен, поскольку эмитенты ожидали снижения ставки налога на выпуск ценных бумаг, которое вступает в силу в текущем году. После снижения данного налога можно будет ожидать некоторой активизации, особенно по бумагам со сроком погашения не более одного года. Кроме того, в текущем году существует вероятность удвоения максимального объема займов.
Не исключено, что федеральные и региональные органы власти будут более активно проводить заимствования на внутреннем и международном рынке облигаций. Пока еще неясно, состоится ли выход правительства РФ на рынок еврооблигаций. Неопределенность положения вызвана отсутствием уверенности не в наличии спроса, а в необходимости привлечения заемных средств.
Что касается операций на рынке акций, то объемы первичных и вторичных эмиссий были ограниченными. Крупнейшие сделки были связаны с вторичными размещениями, в ходе которых акционеры ведущих российских компаний продавали свои доли участия финансовым инвесторам.
Источник: журнал «Экономика России: ХХI век» № 15 (отрывок);
авторы: Владимир Меркушев, менеджер компании Ernst&Young,
Екатерина Решетникова, старший консультант компании Ernst&Young
Lesson 31
How IPOs are Organized
Read and translate the text and learn terms from the Essential Vocabulary.
IPO Procedure
Initial Public Offerings generally involve one or more investment banks as «underwriters». The issuer enters a contract with the underwriters to sell its shares to the public. The underwriters then approach investors with offers to sell these shares.
A large IPO is usually underwritten by a «syndicate» of investment banks led by one or two major investment banks (lead manager). The underwriters keep a commission based on a percentage of the value of the shares they sell. Multinational IPOs may have as many as three syndicates to deal with differing legal requirements in the home country, the U.S. and other countries. Because of the wide array of legal requirements, IPOs typically involve one or more law firms.
Legal Requirements in the United States
The U.S. has the strictest legal regime in the world governing IPOs. Moreover, federal securities law applies not only to IPOs within the U.S., but to any IPO in the world that targets or is likely to target a large number of U.S. investors.
The IPO process is governed by the Securities Act of 1933 and the regulations of SEC; each stock exchange has separate rules that listing companies must follow. Smaller IPOs may also be significantly affected by state blue sky laws; these laws are usually pre-empted by federal law when the stock is to be listed on a major exchange or NASDAQ, but apply fully to certain medium-scale offerings on a local level.
Before the IPO begins in earnest, the issuer must draft a prospectus. The prospectus is a detailed overview of the company’s finances, history, operations, products, risk factors, industry environment, etc. The SEC actively polices the content of each IPO prospectus, and law firms are usually involved in the drafting process.
Under the Securities Act, until an IPO is registered with the SEC, no public offering of any kind may be made by the issuer or its underwriters. Any offering during this «quiet period» is called «gun jumping». After filing, the issuer and underwriters may advertise the IPO through a simple «tombstone» advertisement, listing the name of the company, the amount of stock being offered, the names of the underwriters, and other basic information. Private placement discussions and limited press releases are also permitted. Any written offers to sell stock must be accompanied by a copy of the prospectus as submitted to the SEC, which is usually stamped with a warning of its non-final status in red letters and therefore called a «red herring».
Once the SEC approves the prospectus, the price of the shares is finalized and the IPO enters a «free riding» period in which shares may be offered for sale in a number of ways, such as telephone calls, «road shows» and institutional visits.
The issuer is liable for any misstatement or omission in the prospectus; its directors and underwriters may also be liable if they fail to undertake a «reasonable investigation». Underwriters may defend against liability by completing a due diligence investigation of the issuer, usually involving outside lawyers and accountants.
Legal Requirements in the European Union
The EU does not have a central regulatory mechanism for IPOs, but has made several steps toward unifying European laws relating to IPOs, most notably the Prospectus Directive of 2003. In Europe, underwriters generally face joint and several liability for the underwriting of all the offered securities. This differs from the U.S. rule, where each underwriter is separately liable for their allotted portion of the offering.
Pricing
Historically, IPOs both globally and in the U.S. have been underpriced. The effect of underpricing an IPO is to generate additional interest in the securities. This leads to massive gains for investors who enter the IPO early. However, underpricing an IPO results in «money left on the table». Investment banks take many factors into consideration when pricing an IPO, and attempt to reach an offering price that is low enough to stimulate interest in the stock, but high enough to raise an adequate amount of capital for the company.
Investment Banks
Investment banks assist public and private corporations in raising funds in the capital markets, as well as in providing strategic advisory services for M&As and other types of financial transactions. They also act as intermediaries in trading for clients. Investment banks differ from commercial banks, which take deposits and make commercial and retail loans. In recent years, however, the difference between them has blurred, especially as commercial banks are now offering more investment banking services. In the U.S., the Glass-Steagall Act, created in the wake of the Stock Market Crash of 1929, prohibited banks from simultaneously accepting deposits and underwriting securities; it was repealed by the Gramm-Leach-Bliley Act in 1998. Investment banks may also differ from brokerages, which in general assist in the purchase and sale of stocks, bonds, and mutual funds.
Definitions
There appears to be considerable confusion today about what does and does not constitute an «investment bank» and «investment banker». In the strictest definition, investment banking is the raising of funds, both in debt and equity, and the name of the division handling this in an investment bank is often called the «Investment Banking Division» (IBD). However, only a few small boutique firms solely provide this, with almost all investment banks heavily involved in providing additional financial services for clients such as the trading of fixed income, foreign exchange, commodity and equity securities. It is therefore acceptable to refer to both the «Investment Banking Division» and other ‘front office’ divisions such as «Fixed Income» as «investment banking».
More commonly used today to characterize what was traditionally termed «investment banking» is «sell side». This is trading securities for cash or securities (i.e., facilitating transactions, market making), or promoting securities (i.e. underwriting, research, etc.). The «buy side» constitutes the pension funds, mutual funds, hedge funds, and the investing public who consume the products and services of the sell side in order to maximize their return.
Role of Modern Investment Banks
The original purpose of an investment bank was to raise capital and advise on M&As and other corporate financial strategies. As banking firms have diversified, investment banks have come to fill a variety of roles:
– Underwriting and distributing new security issues
– Offering brokerage services to public & institutional investors
– Providing financial advice to corporate clients, e.g. on securities issues and M&As
– Providing financial security research to investors and corporate customers
– Market making in particular securities.
Investment banks have also moved into forex markets, private banking, asset management and bridge financing.
A key role of investment banks is to help companies raise capital in the capital markets by arranging the issuance of new securities. There are two ways to do this: through a public offering or through a private placement.
The Main Activities and Units
Large, global investment banks typically have several business units, including Investment Banking, concerned with advising public and private corporations; Research, concerned with producing reports on valuations of financial products; and Sales and Trading, concerned with buying and selling products.
An investment bank is split into the so-called Front Office, Middle Office and Back Office, with Front Office widely deemed as having the highest-caliber employees in terms of intellectual and/or interpersonal capital, and Back Office the least
Front Office.
Investment Banking is the traditional aspect of investment banks which involves helping customers raise funds in the Capital Markets and advising on M&As and Corporate Finance. Investment bankers prepare idea pitches that they bring to meetings with their clients, with the expectation that their effort will be rewarded with a mandate when the client is ready to undertake a transaction.
Financial Markets is split into four key divisions: Sales, Trading, Research and Structuring.
– Sales and Trading is often the most profitable area of an investment bank, responsible for the majority of revenue of most investment banks. Sales is the term for the investment banks sales force, whose primary job is to call on institutional and high-net-worth investors to suggest trading ideas (on caveat emptor basis) and take orders. Sales desks then communicate their clients’ orders to the appropriate trading desks, which can price and execute trades, or structure new products.
– Research is the division which reviews companies and writes reports about their prospects, often with «buy» or «sell» ratings. While the research division generates no revenue, its resources are used to assist traders in trading, the sales force in suggesting ideas to customers, and investment bankers by covering their clients. In recent years the relationship between investment banking and research has become highly regulated, reducing its importance to the investment bank.
– Structuring has been a recent division as Derivatives have come into play, with highly technical employees working on creating complex structured products, which typically offer greater margins and returns than underlying securities.
Middle Office.
Risk Management involves analyzing the risk that traders are taking onto the balance sheet in conducting their daily trades, and setting limits on the amount of capital that they are able to trade in order to prevent ‘bad’ trades having a detrimental effect to a desk overall.
Back Office.
Operations involve data-checking trades that have been conducted, ensuring that they are not erroneous, and transacting the required transfers.
Technology – Every major investment bank has considerable amounts of in-house software, created by the Technology team, who are also responsible for IT support.
Recent Evolution of the Business
Investment Banking is one of the most global industries, and is hence continuously challenged to respond to new developments and innovation in the global financial markets. Throughout Investment Banking history, many have theorized that all investment banking products and services would be commoditized. However, new products with higher margins are constantly invented by bankers in hopes of winning over clients and developing trading know-how in new markets. Since these cannot be patented or copyrighted, they are very often copied quickly by competing banks, pushing down trading margins. For example, trading bonds and equities for customers is now a commodity business, but structuring and trading derivatives is highly profitable. Each contract has to be uniquely structured to match the client’s need, may involve complex pay-off and risk profiles, and is not listed on any market.
Possible Conflicts of Interest
Potential conflicts of interest may arise between different parts of a bank, creating the potential for financial movements that could be deemed as market manipulation. Authorities that regulate investment banking (the FSA in the United Kingdom and the SEC in the U.S.) require that banks impose a Chinese Wall which prohibits communication between Investment Banking and Research and Equities.
Some of the conflicts of interest involved in investment banking are:
Historically, equity research firms were founded and owned by investment banks. One common practice is for equity analysts to initiate coverage on a company in order to develop relationships that lead to highly profitable investment banking business. In the 1990s, many researchers allegedly traded positive stock ratings directly for investment banking business. Companies would also threaten to divert investment banking business to competitors unless their stock was rated favorably. Increased pressure from regulators and a series of lawsuits and prosecutions curbed this business to a large extent following the 2001 stock market tumble.
Many investment banks also own retail brokerages. Also during the 1990s, some retail brokerages sold consumers securities that did not meet their stated risk profile. This behavior may have led to investment banking business or even sales of surplus shares during a public offering to keep public perception of the stock favorable.
Since investment banks engage heavily in trading for their own account, there is always the temptation or possibility that they might engage in front running.
Source: Wikepidia
Essential Vocabulary
1. underwriting (UW) n – андеррайтинг (покупка ценных бумаг у эмитента для перепродажи или собственных инвестиций); страхование; гарантирование размещения займа
underwriter n – андеррайтер, гарант
underwrite v – гарантировать, страховать
2. syndicate n – синдикат (консорциум)
syndicate v – синдицировать, образовывать синдикат
3. lead manager – лид-менеджер (ведущий менеджер: банк, являющийся главным организатором и гарантом займа)
4. blue sky law – «законы голубого неба» (законы ряда штатов, предназначенные для защиты от мошенничества при эмиссии и торговле ценными бумагами)
5. pre-emption n – покупка прежде других; преимущественное право на покупку
pre-empt v – покупать раньше других; приобретать преимущественное право; осуществлять преимущественное право
pre-emptive a – преимущественное право
6. prospectus n – проспект эмиссии
7. quiet period – «тихий» период (период до и некоторое время после регистрации эмиссии, когда запрещено заниматься ее рекламой)
8. gun jumping – нарываться (торговля ценными бумагами на основе еще не обнародованной информации; незаконное принятие брокером приказов на покупку новых, еще не зарегистрированных ценных бумаг)
9. tombstone n – «надгробный памятник» (краткое объявление в финансовой прессе о займе, выпуске новых акций, поглощении и т. п.)
10. red herring – предварительный вариант проспекта эмиссии до регистрации в Комиссии по ценным бумагам и биржам США
11. road show – презентация компании или эмиссии ценных бумаг, которая устраивается компанией и ее инвестиционными советниками в основных финансовых центрах
12. misstatement n – неверное, ложное утверждение
13. omission n – упущение
omit v – упускать, пропускать
14. joint and several liability – солидарная и индивидуальная ответственность
15. intermediary n – посредник
16. repeal v – аннулирование, отмена
17. boutique firm – маленькая специализированная брокерская фирма или инвестиционный банк с ограниченным кругом операций, клиентов и услуг
18. sell side – организации, занимающиеся продажей ценных бумаг
19. buy side – организации, занимающиеся приобретением ценных бумаг
20. private banking – частные банковские услуги
21. asset management – управление активами
22. bridge financing – промежуточное финансирование
23. front office – «франт»-офис, передний офис
24. middle office – средний офис
25. back office – «бэк»-офис, вспомогательный офис
26. pitch n – зд. реклама
pitch v – излагать, рекламировать
27. corporate finance – корпоративные финансы
28. caveat emptor – лат. «пусть покупатель остерегается», «качество на риске покупателя»
29.trading desk – торговый стол
30. buy – «покупать» (инвестиционная рекомендация)
31. sell – «продавать» (инвестиционная рекомендация)
32. underlying security – базовая ценная бумага
33. commoditize v – превращать в обычные товары
34. market manipulation – манипулирование рынком
35. Financial Services Authority (FSA) – Агентство по финансовым услугам
36. Chinese Wall – «китайская стена» (жесткое разделение функций инвестиционного банка в сфере корпоративных финансов и торговли ценными бумагами)
37. equity research – анализ акций
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